Honourable Winston Jordan
Minister of Finance
Opening Remarks on the Signing of the FATCA
Your Excellency Ambassador Perry Holloway, Other Invited Guests and Observers, Members of the Media:
The significant and historic event witnessed today in the form of the signing of the agreement to implement the Foreign Account Tax Compliance Act (FATCA), represents both the culmination of a long travelled road and the beginning of a new phase in Guyana/United States cooperation in tax and anti-money laundering matters. FATCA, which was enacted in 2010 by the US Congress, is designed to prevent tax fraud and evasion by US taxpayers using offshore banking facilities. It creates a new regime of automatic tax information sharing between financial institutions. FATCA requests foreign financial institutions to identify and report information about accounts held by US taxpayers in their jurisdictions. FATCA is part of a global movement towards Automatic Exchange of Information (AEIO) of non-resident financial account data among tax authorities. The Automatic Exchange of Information has the potential to increase transparency, cooperation and accountability among financial institutions, and encourage tax payers to voluntarily disclose all relevant information to tax authorities.
Guyana chose to be involved in this important venture not only because it will help to reduce tax evasion in the United States, but also, in Guyana, through the exchange of information between the two countries. To fulfill the potential of FATCA to be a potent weapon in the fight against tax evasion and avoidance, Guyana is required to undertake a number of measures to improve and strengthen its legislative and institutional arrangements. Thus, for example, Guyana amended Section 63 of the Financial Institutions ACT, Chap 85:03, Laws of Guyana, to designate the Guyana Revenue Authority as the competent Authority, on behalf of the Government of Guyana. This will allow Financial Institutions to provide the GRA with customer information on reportable accounts.
The sharing of information across countries is important for the enforcement of domestic tax laws. By working together to increase transparency, both Guyana and the US will be able to detect and deter abuse of the tax system in both countries. This will enable better accountability within the global financial sector. The FATCA Agreement represents another step in our countries’ cooperation with each other, in order to combat money laundering and tax evasion and avoidance.
Improving financial regulation and cooperation with international regulators has become an urgent priority in recent years, as the loss of correspondent banking relationships, due to de-risking, has put pressure on financial institutions in Guyana and the rest of the Caribbean region. Healthy correspondent banking relationships are essential because they facilitate trade, foster economic growth, create legitimate avenues for growing remittances and providing access to financial services. The adverse effects of de-risking on international trade, financial stability and growth, and money transfers (including remittances) have already been felt in many of our countries. If de-risking continues unchecked, all Caribbean states can expect to experience some level of macroeconomic instability, financial exclusion and, ultimately, economic collapse.
The implementation of FATCA is only one aspect of Guyana’s recent efforts to strengthen the regulation of its financial sector. This year, Guyana undertook a National Risk Assessment in order to allow a more pro-active approach to address Money Laundering and Terrorist Financing. The results of this exercise will allow us to examine to what extent Guyana is compliant with the Financial Action Task Force (FATF) recommendations. Further, numerous studies, reports and high level meetings with organisations such as the IMF, World Bank, United Nations and the Commonwealth Secretariat have been undertaken. Additionally, Guyana also has a pre-existing Tax Information Arrangement (TIEA) with the US Government that imposes an income tax arrangement. We are not unaware of the onerous burden and the great financial and human costs placed upon us to meet the requirements of the organisations imposing the new regulations. We will require technical and other forms of assistance, if these regulations are to be implemented in a timely and effective manner.
Your Excellency, Guyana supports all initiatives that will build our domestic and global financial sectors, including the sharing of tax information. We look forward to continued fraternal relations with the US, not only on the issue of taxation, but also on other social and economic issues, as we strive to stamp out corruption, money laundering and the illegal trade of drugs across the globe.